We report the fabrication of GaN-based lightemitting diodes (LEDs) with ytterbium-doped alumina-zinc-oxide (AZO:Y) upper contact. It was found that AZO and AZO:Y are both highly transparent in the visible region with good thermal stability optically. However, it was found that AZO:Y is much more thermally stable electrically, as compared with AZO. Furthermore, it was found that the output power of GaN LEDs with AZO upper contact decreased significantly from 2.80 to 2.30 mW after 700 °C annealing. With the same annealing condition, it was found that output power decreased only slightly from 2.77 to 2.69 mW for the LEDs with AZO:Y upper contact.